Nomura buys Lehman's Europe operations

Nomura Holdings Inc, Japan’s biggest securities firm, agreed to buy Lehman Brothers Holdings Inc’s investment banking and equities unit in Europe, saying it would keep on most of the firm’s 2,500 employees in London.

The Tokyo-based bank will pay a “nominal” amount for Lehman’s European operations, Nomura Special Adviser Sadeq Sayeed told reporters on a conference call today. He declined to be more specific. The purchase follows Nomura’s $225 million takeover yesterday of Lehman’s Asian-Pacific unit.

The turmoil in the financial markets over the past 11 days is giving Japanese banks an opportunity to seize global market share. Mitsubishi UFJ Financial Group Inc, Japan’s largest bank, plans to buy 20 per cent of Morgan Stanley for $8.4 billion. Nomura President Kenichi Watanabe is now restarting an overseas push that was rolled back by his predecessor in 2007, as losses on US mortgage investments mounted.

 

“Nomura’s track record outside Japan has always been a bit spotty,” said Peter Hahn, a Cass Business School fellow and a former Citigroup Inc banker in London. “Here, they are buying someone with a fairly good track record. Whether they can then capitalise on it remains the issue.”

Lehman is 12th this year in providing merger advice in Europe, down from seventh last year, according to data compiled by Bloomberg. Nomura doesn’t rank in the top 20 advisers in Europe or even globally, the data show.

‘Extraordinarily Difficult’: “Putting these businesses together now and extracting maximum value for Nomura shareholders out of these businesses is going to be an extraordinarily difficult and challenging task,” said Sayeed.

PricewaterhouseCoopers, Lehman’s bankruptcy administrator in London, said the deal will save 2,500 jobs.

“We’re confident we will retain the best of them,” Nomura’s Sayeed told reporters today. “If we were not confident, we wouldn’t do it.”

Nomura will pay $2 for the two units, and will assume the cost of paying the employees starting next month, said a person with knowledge of the agreement. The deal also includes investment banking and equities in the Netherlands, Qatar, Dubai, Kuwait, Nomura said in the statement. The purchase doesn’t include any of Lehman’s European real estate, trading assets or trading liabilities.

Nomura’s purchase follows Barclays Plc’s purchase of Lehman’s US investment banking unit last week for $250 million. Barclays had expressed interest in buying only Lehman’s European equities unit, people familiar with those talks said yesterday.

PwC is seeking to recoup about $8 billion in cash the US parent allegedly withheld before it filed for bankruptcy protection last week. The firm is seeking to recover the cash to pay creditors in Europe.